Employee has a dependent child on his health insurance. The child is over 19 and is covered only why she is a full-time student. The child was a full-time student in during the first term of 2001. In the second term of 2001 the child dropped below full-time status. The child registered for the first term in 2002 but, due to the child’s academic performance in the last term of 2001, was placed on academic dismissal. The dependent child appealed and lost; this process took the better part of January 2002. Per the University, the dependant is treated as though he/she was never a student of any classification for the first term of 2002.

The plan year is the calendar year. OE was in November of 2001. The employee elected family coverage for 2001 and 2002. The employee now wants to change the election to employee & spouse. Since the change in status actually occurred when the dependant stopped being a full-time student in the spring of 2001, can the change in election be made now?

Business sold in asset sale this week. All employees were terminated (and rehired by new employer) 2 officers now working for new ER also remain employed by old corporation to close it out. Profit Sharing Plan (standardized) is currently scheduled to be terminated at the end of this fiscal and plan year (9/30). Employer wants to make a profit sharing contribution for this plan year. All participants with over 500 HOS in this plan year will receive allocation then will become 100% vested once the plan terminates. Currently, the plan requires employees to wait until end of plan year after termination to receive distribution.

Questions: 1) As long as corporation stays in existence, any problem waiting until 9/30 to terminate the plan then make the final PS contribution and begin distribution of terminated employees accounts? or 2) is this a partial termination because the majority of employees were terminated upon sale of assets? and if so, must we allow immediate distribution and vesting for those terminated employees? 3) the two remaining officers will receive large bonuses in this year: since plan uses W-2 wages, any problem with allocating contribution based upon wages including these bonuses?

I have a situation where an HCE ( Age 51) completed a distribution form and took a distribution from the company's MPP and did a direct rollover to the same company's PSP. The participant had not met a distributable event under the MPP and the form was never signed by a plan trustee, however the financial institution still processed the distribution and a Form 1099-R was issued for 2001.

The company has since changed financial institutions and all of the plan assets are with a new carrier. I am trying to think of the simplist way to correct the defect in an acceptable manner. We are getting ready to merge the MPP into the PSP.

A couple of thoughts in correcting the issue would be to issue a corrected 2001 Form 1099-R showing the amount as zero and then transferring the money back to the MPP to restore the account and then do the merger. Because the MPP is going to be merged into the PSP anyway, the other thought I have would be to do a retroactive amendment to the MPP to amend the NRA to age 50, thereby creating a distributable event under the MPP, but I'm not sure that would be acceptable. I have been reviewing the Employee Plans Compliance Resolution System but nothing seems to address this exact situation. Any thoughts would be helpful.

Thanks,

Brian

My boss just brought back a proposal from a brokerage firm contrasting several different types of profit sharing plans for a potential client, including an "Age Neutral" plan. I presume that this is a class-based profit sharing plan ala New Comp, except that you do your General Testing on contributions, rather than accrual rates. Could I get a confirm on this?

(As an aside, I think that the proposal demonstrated the danger of proposal software falling into the wrong hands. Their proposal had the 4 sons of the owner in their own group getting 25% of comp, a second group of NHCEs at 23.5%, and a third group including the owner HCE and remaining NHCEs at 3%. I thought that the 5% threshold should apply - right or wrong if not testing on accruals but benefits? Second off, I have a hard time figuring out how you would pass a General Test with 4 of your 5 HCE rate groups having 0% ratio percentages - since no NHCE had an equal or higher rate.)

I have just noticed that the Plan Administrator of one of our clients has failed to deduct and remit loan repayments for one of their participants. Loan repayments should have begun 6/01 and the loan was for 2 years. I know that according to the regulations a 1099-R should be issued for the participant and they should begin to make loan repayments. I have 2 questions:

1) Does loan have to be repaid by the end of the 2 years or can it be extended because it is less than the 5 year maximum?

2) Is there any way around having to issue the 1099?

Our client, a medical practice, has a Profit Sharing Plan which will give their doctors the maximum $40,000 contribution for 2002. Several of the doctors also receive 1099 income from making speeches, etc. These doctors want to establish individual SEP's on their own and contribute another $40,000 to the SEP based on their 1099 income.

Is this allowable for them to receive $40,000 in PS from their employer, and also contribute another $40,000 to their own SEP? Can they use Form 5305-SEP or does it have to be a prototype SEP? Thanks.

It is my understanding that unless a plan sponsor has reason to believe they will be sued, restorative payments must be considered a contribution to the plan. Following are 3 examples of different restorative payments. In all situations, we assume that the payments would be considered contributions. How do you justify allocating these payments as contributions, since the plan document does not allow for a contribution allocation of this type? Do the payments have to go in as 100% vested? It is my understanding that they would be included as an annual addition - is this correct? Are there any situations where you would also include them in your ADP or ACP testing? How do you treat them for other testing, such as coverage testing?

Situation 1: A participant requests a transfer among investment funds. Due to a TPA error, the transfer is done incorrectly and there is a loss. The TPA makes a deposit to the plan to make up the loss.

Situation 2: A participant requests a transfer. The plan sponsor failed to notify the TPA of the request, so the transfer is not done. The plan sponsor makes a deposit to the plan to make up the loss.

Situation 3: A participant requests a distribution in June 2001. The plan is in the process of being converted from one TPA to another. For various reasons, the distribution cannot take place until February 2002. There has been a large drop in the market value so the participant receives considerably less than he would have had the distribution taken place in June or July, 2001. The plan sponsor would like to make up the difference. Can the difference be deposited into the plan so that the employee can roll it over? If so, how is it handled?

I currently contribute $2000 (non-deductible) to an IRA. I've been doing this for about 6 yrs.

The question I have is: If I convert to a Roth IRA will I have to pay taxes?

The IRA account is actually worth less than what I put into it.

Thanks!

I am looking for information on Premium only Plans. Unfortunately, most of the information posted is for FSAs or full flex plans. I also need information on how to report the POP.

Thanks!

Is 401(m) testing necessary for a 403(B) plan maintained a a church organization? Deferral and match are the only contributions.

Thanks

My agency is finally beginning to consider utilizing the internet as a promotional resource. I’m trying to find some companies that are able to effectively target diverse demographics in a relatively short amount of time. I’ve encountered some difficulty in finding information on anything other than spam and banner placements. Would anyone know of any companies having success with other means of internet marketing?

I would like some thoughts about the best ways to train new employees in the 401(k) TPA business. We are a small TPA firm without a large training budget. In the past we have primarily trained new employees by pairing them with seasoned employees in our firm. We would like to augment this with a heavy dose of technical details, and wondered what would be best. There are so many choices - ASPA certifications, the Pension Answer Books, CCH, seminars, reading the whole darn IRS code, etc. etc. If you had to recommend one thing to a new employee, what would it be? Thanks!

I worked at a nursing home as a med tech (passing medications to all of the residents). I had an episode on 11/18/01 at home. I went to the hospital and was diagnosed with 3 benign brain tumors and seizure disorder. I have been out of work since then. I had a "Status Epilepticus" which lasted for 3-4 hours on 1/5/02. I applied and got short term disability. It lasted until 2/23/02. I was terminated on 2/26/02. I have applied for long term disability but have not heard anything yet. I was also told that I would have to go on COBRA as of 3/1/02, which I have not recieved any papers on. I am asking if the nursing home has a right to terminate me or if they have to give me more time to adjust to this illness instead of terminating me?

When is a person or party determined to be a disqualified person or party in interest (with regard to an ESOP)? At the time of default on the promissory note or at the time the note was signed (this individual was a disqualified person at the time the note was signed but would not be considered a disqualified person at the time of the default - if the status is also determined at default) When is "disqualified person" or "party in interest" status determined with regard to an ESOP? Thank you for any insight.

I have a employer (doctor with his own practice) who sponsors a profit sharing plan. Half way through his 2001 plan year (calendar year) his practice was merged with a local hospital who sponsors a 403(B) plan. He was the only employee that received income from his practice during the entire plan year. Am I correct in calculating his maximum discretionary contribution to the profit sharing plan as 15% of eligible compensation less 403(B) employee contributions?

My mother is 69, but she will be 70 in June 2002 and 70 1/2 in December 2002. She has a traditional IRA and would like to convert it to a Roth. She will file MFJ with my father, and their modified AGI will be less than the $100K max.

Can she convert this year even though she is due to begin receiving RMD's in 2002?

If she can convert, will she be required to take minimum distributions from the Roth in future years?

Thanks!

We have an employee that enrolled for HCRA. He based his contribution on the fact that he was going to have Lasix eye surgery. He got as far as the operating table and the eye doctor said he thought he should not have the surgery. Now this employee has all this money in his account. Can he stop further deductions? Thanks.

I've got a traditional IRA that was established with money from a 403B account from a previous job. Can I contribute to it every year and to a roth IRA?

thx!

We have over diversified five participants in an ESOP Plan. We were provided with the incorrect beginning balances which overstated the amount eligible for diversification.

What do you suggest that we do to correct this?

The stock is closely held and not a good market. But do we repurchase the stock that was overdiversifed at the price that we sold it at...

OR do we give the participants the option to leave the stock diversified and just subtract that amount from future eligible amounts....:confused:

I was reviewing my 1040 tax instruction book and discovered I CANNOT take a Roth contribution as a tax deduction. I am wondering if I can still contribute to my Roth this year even if I take the $2,000 deduction for my regular IRA?